U.S. economy adds 304,000 jobs in January as unemployment climbs to 4 percent
Friday, February 01, 2019
The widely watched U.S. employment report for January is positive in spite of the partial federal government shutdown that spanned most of the month. Nonfarm employers added 304,000 jobs in January versus 312,000 new hires in December, the Bureau of Labor Statistics reported.
The January rate of unemployment rose to 4.0 percent from December’s 3.9 percent "potentially because furloughed government workers and contractors were counted as jobless in the household survey," according to Elise Gould, an economist with the Economic Policy Institute in Washington, D.C.
In January, Hispanic unemployment rose to 4.9 percent versus 4.4 percent in December. Other major worker groups fared better. "The jobless rates for adult men (3.7 percent), adult women (3.6 percent), teenagers (12.9 percent), Whites (3.5 percent), Blacks (6.8 percent), and Asians (3.1 percent) showed little change over the month," the BLS reported.
Workers’ wages grew in 2018. "Nominal wage (money rates absent other market factors such as inflation) growth in the private sector rose 3.2 percent over the year," according to EPI’s Gould. "Production/nonsupervisory earnings rose at a faster clip, 3.4 percent over the year, potentially reflecting the boost to workers’ paychecks from the 19 state minimum wage increases that took effect on January 1."
In January, the employment-population ratio (the share of the labor force now on payrolls versus the total working-age population) was 60.7 percent versus 60.6 percent in December. "The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by about one-half million to 5.1 million in January," the BLS reported, mainly in the private sector perhaps as a result of the partial federal government shutdown that impacted contract workers particularly.
Midsize employers (50-499 employees) led the way with 84,000 new hires in January, down from 129,000 in December, according to the ADP National Employment Report.
Small businesses (1-49 employees) added 63,000 new jobs compared with 89,000 new jobs in December. Companies of 500 or more workers hired 66,000 employees in January, up from 54,000 in December. National franchise hiring rose 33,000 in January versus 29,000 in December.
ADP’s National Employment Report totals America’s nonfarm private sector employment from existing payroll data, according to the ADP Research Institute that works with Moody’s Analytics. ADP reports payroll data for 411,000 American private-sector clients employing nearly 24 million workers nationally. (The BLS surveys businesses and households and counts government jobs.)
According to ADP’s report, the service sector of the economy grew by 145,000 in January compared with 224,000 jobs in December.Professional and business services employment led the way with 46,000 in January, down from 66,000 in December.
In January, there were 13,000 new hires in trade, transportation and utilities compared with 33,000 in December. Education and health added 38,000 new jobs in January versus 61,000 jobs in December.
Payrolls in the goods-producing sector expanded by 68,000 jobs in January versus 47,000 jobs in December. At the top were manufacturing companies that hired 33,000 new workers in January, nearly tripling the 12,000 new employees in December. Construction firms added 35,000 new hires in January compared with 37,000 in December.
"The labor market has continued its pattern of strong growth with little sign of a slowdown in sight," Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement. "We saw significant growth in nearly all industries, with manufacturing adding the most jobs in more than four years. Midsized businesses continue to lead job creation; however, the share of jobs was spread a bit more evenly across all company sizes this month."
Mark Zandi is the chief economist of Moody’s Analytics. "The job market weathered the government shutdown well," he said. "Despite the severe disruptions, businesses continued to add aggressively to their payrolls. As long as businesses hire strongly the economic expansion will continue on."
Meanwhile, the trade conflict between the world’s two biggest and integrated economies, the U.S. and China, continues. Talks on a wide-ranging trade agreement between Washington and Beijing are ongoing.
The U.S. Federal Reserve Bank has opted "to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent." In that way, the central bank aims to achieve "maximum employment and price stability."
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